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Nordhavn Brokers are Multitalented!
Aside from ensuring a customer gets the exact boat they want, Nordhavn sales representatives also promote different ways their customers can enjoy their boats. For instance, Nordhavn salesmen have extensive cruising miles under their belt and are happy to share their experiences of local and trans-Atlantic voyages. Some have shown favorite places to snorkel or discussed ideal boating recipes for fine dining on board. James Leishman's next customers can learn all about catching a prize fish if they so desire.
James, a sales rep in our southwest sales office, recently showcased his immense fishing talents. Last week James and a friend were free-diving off Laguna Beach when James spotted a halibut lying on the sand in about 20 feet of water. Armed with only a spearfishing knife, he dove down, tagged the fish and wrestled it all the way to shore. James said the big flattie bit his hand and it was a tough time getting the fish through the surf and up onto the sand. But the end result was a success. To cap off his 40-lb. snare, the guys grabbed a half-dozen lobsters - perfect for several nights' feasts to come! "It's not like I have some specialized skill, everything just kind of worked out," said James. But, the advanced SCUBA diver and fisherman said he'd be happy to go out with any Nordhavn owner who is interested in capturing a fish - with or without a pole!
Want to avoid California sales tax? Hope you really like Mexico!
By Jeff Merrill
When I go to buy groceries and pay $100 for a couple of bags of food, I don’t usually even look at the receipt. If I used coupons when I shopped, I’d probably wind up saving myself $100 or more annually. And not just on the items themselves, but on all the tax that gets tacked on as a result. It’s not that I’m a freewheeling spender but on such small purchases, I don’t give it a second thought.
In the business of selling yachts I often discuss the choices my clients have regarding taxes during the negotiations for the purchase of a new or used Nordhavn. That 8% at the grocery store that I don’t notice translates to $80,000 on every million dollars spent. That’s serious money which most people would prefer to save or invest on something a little more tangible than funding the state coffers.
Each state has its own rules and regulations for taxes and it’s common for residents to pay sales, use and property taxes. And when it comes time to make a major purchase like a new Nordhavn, which can run up to millions of dollars, we take a closer look at every cost and try to maintain a reasonable budget. Every expense, including sales tax, must be scrutinized.
To promote the boating industry – and perhaps boost their economies – some states have enacted tax-free or low tax purchases of boats. But what are your choices when it comes to California state sales tax? (I should insert a disclaimer here that I am not formally trained or technically qualified to offer tax advice. I’m not an attorney and should know better than to wade into a discussion on taxes, which probably ranks right up there with politics and religion.)
In the past, California had what is referred to as a legal loophole, designed especially for non-residents (but taken advantage of by residents as well) making a purchase of a boat in our state. Essentially, you could avoid paying sales tax if you took possession of the boat via an offshore delivery. It’s not unlike the exemptions several states have in place: stay out of our state for 90 days, then when you come back, the waters of California are free for you to cruise at your leisure!
But no more. While in the past we recommended owners head south to Mexico or north to Oregon to stay put for three months, Legislature has since changed the law and upped the 90-day exile to one year. In an effort to help the state meet the new budget it passed last summer, it’s looking to boost the frequency of taxes collected on big ticket items purchased by those who would otherwise dodge the dues. The now one-year loophole will be enacted until Fall 2006. Lawmakers will then examine the effects of this change and have to decide if it makes sense to enforce it permanently.
This new law has created quite a stir along the waterfront, has certainly cost us a few sales that we would have made previously and the uncertainty of what the future holds has prompted several clients to “wait and see”.
Of course, California will always be here (forgoing the next huge earthquake, mudslide, fire, etc.) and if you’ve got time to kill, why not hang out down south? You can imagine the popularity of yachtsmen and women who have been “forced” to take a Mexican vacation on their new vessel while saving the 8% sales tax. An entire cottage industry known as the “90-day yacht club” spawned just across the border to cater to the demand. So maybe it will now be labeled the “12-month yacht club.”
Meanwhile, there are other options to avoid paying a hefty levy: foreign flag registration, Delaware corporations, LLC arrangements, for example. (All of which are best discussed with a qualified tax expert.)
We do not have a position on the tax issue and will not promote one way over another to our clients. Most Nordhavn purchase agreements are written with the responsibility for the sales tax choice being up to the buyer (and the obligation to pay any taxes owed if they didn’t comply with the letter of the law).
But you have to consider, is saving the money worth all the aggravation? Your primary residence, the place of your boat’s homeport and the location of your intended itinerary must be calculated into your threshold ratio for peace of mind vs. “looking over your shoulder”. Naturally, you can simply pay the sales tax, which many of my clients do, and just be done with it.
One particularly nice thing about our Nordhavns, however, is that their liveaboard design and long ranging capabilities make them an ideal second home to escape state waters and go exploring. So maybe you view the savings on tax dollars as a nice bonus that comes with your true desire of getting out of the States altogether and seeing what else the world has to offer.
For more information on sales tax on boats purchased in California, contact the California State Board of Equalization at 800-400-7115 or go to their website at www.boe.ca.gov. If you are interested in the name of a tax attorney frequently used by clients of Nordhavns, or if you have other questions pertaining to this article, please e-mail me at jeff.merrill@nordhavn.com.
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Southwest Intro 
